23 December 2011

Economic Trends Seen In 2011 Owing To Startups

2011 has seen the global economy on a rollercoaster ride, with startups playing a significant role; it might be mammoth investments by VCs, PEs, celebrities alike, or aggressive hiring. Here are the economic trends seen over the year, owing to startups.

Bullish Investors

2011 has seen a total of $752 million Venture capital funds invested across 136 transactions, as compared to the $ 707 million across 132 transactions in 2010. Also, the year saw about $2,249 million across 98 deals in Private Equity by the end of September. This shows that the year saw the investors acting bullish on high-risk startups, particularly in the IT, Mobile, and ecommerce sectors. This trend predicts that 2012 would see a similar aggressiveness in the investment and hiring scenario.

Aggressive Hiring

83 percent of the startups were in a hiring mode in 2011, as compared to 73 percent in 2010. The ecommerce startups saw aggressive hiring, which can be attributed to the huge amount of fundings received from VCs and PEs. The year also saw many startups going to various campuses for hiring. The aggressive viral marketing has provided better visibility to the startups among the prospective employees. The predicted trends in investments would see an equally aggressive hiring scenario in 2012.

Growth In International Entrepreneurship

2011 saw many startups in U.S. being founded by entrepreneurs of Indian origin. This can be attributed to the changing tax laws and regulations to make an investment more attractive. The move not only expands the market reach, but also helps the entrepreneurs by making a broad platter of opportunities, investors and ideas aboard. Immigrants founded almost half of the 50 top venture-backed companies in U.S. in 2011, while 37 of these 50 companies had atleast one immigrant in a key management position.

Going Public

2011 saw many technology startups go public: LinkedIn, Groupon, Zynga, and Pandora are a few of them. 2012 has many more companies planning to go public, with Facebook, Carlyle Group, Yelp lined up. The startups also saw a significant rise in their stock prices in the later months. Going public has helped companies raise capital to grow their business and trade on major stock exchanges, which brings more exposure to the startup.